The ink on a list of newly sanctioned Iranians has barely dried, but the EU is already homing in on another set of penalties. Ukrainian officials have highlighted the use of Iranian-made drones in Russian attacks across Ukraine since mid-September. Several reports and intelligence assessments have concluded the drones were most likely delivered during the summer to be used in the war — but member states want proof before deciding on further sanctions against the Islamic Republic, which vehemently denies any such allegations. It is likely the EU will make progress this week, and aim to have new penalties in place by November. In the meantime, NATO will deliver counter drone systems to Ukraine, Secretary General Jens Stoltenberg said yesterday.
What’s Happening
Gas Steps | The European Commission has warmed to the idea of capping gas prices used for electricity production, a strategy it has previously criticized as risky. “It merits really to look deep into it,” Commission President Ursula von der Leyen said yesterday while presenting the EU executive’s energy price proposals.
Tankers Grounded | The latest EU sanctions on Russian petroleum could end up depriving a swath of the world’s tanker fleet of industry-standard insurance. The bloc’s eighth round of sanctions state that if a tanker owner transports Russian crude above an agreed price threshold, their ship would be prohibited from getting EU services needed to ship the commodity, such as insurance, “in the future.”
Powering Bitcoin | How green is your crypto? If you hold Bitcoin, the answer is probably: Not very. The EU wants to develop an energy efficiency label as it tries to cut consumption and meet its climate goals. The idea is a grading system would create incentives for tokens to move to mining systems that use less power — like Ethereum did last month.
Trade Demands | “Europe needs to learn how to act with force and speed,” French Finance Minister Bruno Le Maire told reporters at the Paris car show yesterday. Paris is pushing the EU to make faster decisions on exemptions to state aid rules as it demands the bloc take a tougher approach to trade with the US and China.
Balancing Act | With a plunging currency and fragile finances, Hungarian Prime Minster Viktor Orban’s high-wire act of reconciling his courtship of Vladimir Putin with the task of unlocking billions of euros in EU funds is becoming more perilous. Hungary is turning into a cautionary tale of what happens when a political project becomes disconnected from economic reality.
In Case You Missed It
Stop Support | The ECB must continue to rapidly roll back monetary support and not halt interest-rate increases too early, according to Governing Council member Joachim Nagel. With inflation “alarmingly high” and policy still accommodative, officials “have to withdraw that stimulus quickly,” the Bundesbank president told Harvard University students.
Ukrainian Assistance | The EU paid Ukraine a first disbursement of 2 billion euros, part of a package totaling 9 billion euros in so-called macro-financial aid first announced by the bloc in May. Further installments of 2.5 billion euros and 500 million euros are expected in the second half of November and December respectively. One billion euros were paid in August.
Rwanda Funding | The EU is considering providing financial support to Rwandan troops fighting an Islamic State-linked force in Mozambique’s gas-rich northeastern region. Talks with member states are at an advanced stage, with the proposal receiving strong support from France, Germany and Italy, we were told.
New Minister | Sweden’s new prime minister, Ulf Kristersson, chose lawmaker and former labor market minister Elisabeth Svantesson to oversee the biggest Nordic economy on the cusp of a recession. The nationalist, anti-immigrant Sweden Democrats, who emerged as the biggest winners in last month’s election, won’t have seats in the new cabinet.
Suspended Chief | Germany suspended the head of its Federal Cybersecurity Authority, Arne Schoenbohm, after a report uncovered an alleged link with Russian intelligence. An interior ministry spokeswoman said the allegations “permanently damaged the public’s necessary trust in the neutrality and impartiality of the conduct of his duties.”
Career Change | Estonian Finance Minister Keit Pentus-Rosimannus resigned her post Tuesday to take on a role on the European Court of Auditors. She’ll succeed Juhan Parts, a former Estonian premier who has sat on the panel since 2017. The Baltic nation’s new finance minister hasn’t been announced.
Chart of the Day
The European Central Bank’s Governing Council will probably debate the timing of quantitative tightening at its Oct. 27 meeting and Bloomberg Economics expects the actual reduction of the balance sheet to kick off in March. ECB data show nearly 1% of APP holdings will mature each month, suggesting a decade or more may be required to completely offload those bond purchases. Like other central banks, the ECB could implement active securities sales to hasten the shrinkage of its balance sheet, though BE expects the Governing Council to tread cautiously.
Today's Agenda
All times CET
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9 a.m. Commission President Ursula von der Leyen participates in European Parliament debate ahead of leaders summit; European Parliament to quiz commission on efforts to protect critical infrastructure
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11 a.m. Eurostat releases September inflation data
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11.30 a.m. Slovak President Zuzana Caputova addresses the European Parliament
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4:30 p.m. German Economy Minister Robert Habeck, German Finance Minister Christian Lindner and French Finance Minister Bruno Le Maire news conference after virtual talks
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5:30 p.m. Von der Leyen, Council President Charles Michel and Czech Prime Minister Petr Fiala hold news conference at Tripartite Social Summit
Commissioners Thierry Breton and Olivér Várhelyi participate, via videoconference, in a meeting with Western Balkans and EU telecom CEO